How South Carolina Taxes Rental Income
South Carolina taxes rental income from investment properties as regular income at the state’s graduated tax rates, which range from 0% to 7% as of 2023. Here’s what property owners need to know:
State Income Tax Rates
- 0% on income up to $3,070
- 3% on income from $3,071 to $6,150
- 4% on income from $6,151 to $9,230
- 5% on income from $9,231 to $12,310
- 6% on income from $12,311 to $15,400
- 7% on income over $15,400
Deductible Expenses
South Carolina allows landlords to deduct these common expenses:
- Property taxes
- Mortgage interest
- Insurance premiums
- Maintenance and repairs
- Property management fees
- Utilities paid by the landlord
- Depreciation
Frequently Asked Questions
Do I need to file a separate state tax return for rental income?
No, rental income is reported on your regular SC1040 state tax return.
Are short-term rentals taxed differently?
Yes, short-term rentals under 90 days are subject to additional 7% sales tax and local accommodations taxes.
Can I deduct travel expenses to my rental property?
Yes, reasonable travel expenses for property management and maintenance are deductible.
Do I need to make estimated tax payments?
Yes, if you expect to owe $1,000 or more in taxes for the year.
What records should I keep?
Keep all receipts, rental agreements, expense records, and maintenance logs for at least 3 years.
Are property improvements deductible?
Major improvements must be depreciated over time rather than deducted immediately.
Do I need to collect sales tax from tenants?
Only on short-term rentals under 90 days.
The Bottom Line
South Carolina taxes rental income at regular state income tax rates up to 7%. Proper record-keeping and understanding available deductions can help minimize your tax burden. Consider consulting with a tax professional familiar with SC rental property taxes to ensure compliance and maximize deductions.